Companies violating consumer law could now face higher penalties

Companies that violate Australia’s consumer laws could now face higher financial penalties.

The Federal Parliament on Friday passed legislation that will increase maximum consumer law fines from around $1.1 million to over $10 million.

“Companies will now face more serious financial consequences for breaching consumer law that align with competition law breaches,” Australian Competition and Consumer Commission (ACCC) chair Rod Sims said.

In a review of Australian Consumer Law (ACL), the government body responsible for consumers affairs in Australia and New Zealand recommended raising the penalty for breaches to $10 million, three times the value of the benefit received, or, if the benefit cannot be calculated, to 10 per cent of the company’s annual turnover in the preceding 12 months.

Penalties against individuals will increase from $220,000 to $500,000 per breach.

Sims said the ACCC has advocated for higher maximum penalties to deter businesses from breaching consumer laws.

“Penalties need to hit the bottom line so they are not simply seen as the cost of doing business,” he said.

“Perhaps more important, penalties need to be high enough to be noticed by boards and senior managers so that compliance with the law is a higher priority.”

The highest penalty the Federal Court has ordered for breaches of Australian Consumer Law is $10 million (in ACCC actions against Coles and Ford). The highest penalty the Federal Court has ordered for breaches of competition law is $46 million (in an ACCC action against Yazaki).

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